Before March 4, 2020, if you wanted to buy Bitcoin in India, you had to find someone willing to trade cash in person. Banks had been ordered to cut off crypto exchanges completely. No bank accounts. No UPI. No NEFT. No withdrawals. It didnāt matter if you were running a legitimate business or just buying crypto for yourself - the Reserve Bank of India (RBI) had made it nearly impossible to operate. That ban didnāt stop people from trading, but it made everything slower, riskier, and more expensive. Then came the Supreme Court decision - and everything changed.
How the RBIās 2018 Ban Killed Crypto Banking in India
On April 6, 2018, the RBI issued a circular that told all banks and financial institutions under its control: stop dealing with anyone involved in virtual currencies. This wasnāt just a warning. It was a shutdown order. Banks had to freeze accounts of crypto exchanges like ZebPay, CoinSwitch, and Unocoin. Payment gateways stopped working. Even people who just held crypto couldnāt cash out their profits without jumping through impossible hoops. The RBI claimed it was protecting consumers from fraud and financial instability. But hereās the thing - they never showed any real evidence that banks had lost money because of crypto clients. No major bank had collapsed. No customer had been wiped out by a crypto exchange failure. The RBIās argument was based on fear, not facts. And the collateral damage was real. Startups using blockchain for supply chain tracking, remittances, or identity verification couldnāt open bank accounts either. Innovation in fintech ground to a halt.The Supreme Courtās Landmark Ruling: Why the Ban Was Illegal
The fight didnāt end in boardrooms or press releases. It went to court. The Internet and Mobile Association of India sued the RBI, arguing the ban violated the constitutional right to carry on any profession or business. On March 4, 2020, the Supreme Court agreed - and struck down the RBIās circular entirely. Justice Rohinton Fali Nariman wrote the opinion. He didnāt say crypto was safe or good. He said the RBI had overreached. The court ruled the ban was disproportionate. If the RBI was worried about money laundering or market volatility, it couldāve used existing laws - KYC, AML checks, transaction monitoring - instead of wiping out an entire industry. The judges pointed out that no regulated bank had suffered losses from crypto clients. The RBI had no data to back up its claim of systemic risk. Thatās why the ban was ruled unconstitutional under Article 19(1)(g). This wasnāt just a win for crypto traders. It was a win for rule of law in India. For the first time, a financial regulator was held accountable for using fear to justify a blanket ban. The court made it clear: if you want to restrict a business, you need proof - not just suspicion.What Happened Right After the Ruling?
Within days, crypto exchanges reopened their banking channels. ZebPay, CoinDCX, and WazirX started processing deposits and withdrawals again. Trading volumes jumped 300% in the first month. New users flooded in - not just speculators, but professionals, students, and small business owners looking for alternative ways to store value. The number of active crypto users in India went from under 5 million in early 2020 to over 15 million by the end of 2021. By 2025, that number is estimated at 28 million. India now has the third-largest crypto user base in the world, behind only the United States and Nigeria. That growth didnāt happen because of government support. It happened because the courts protected peopleās right to trade.
Why the Government Still Doesnāt Like Crypto - Even After Losing in Court
The RBI didnāt give up. Former Governor Shaktikanta Das kept warning that crypto could destabilize the rupee, trigger capital flight, or undermine monetary policy. In 2021, the government floated a draft bill called the Cryptocurrency and Regulation of Official Digital Currency Bill. It proposed banning all private cryptocurrencies - mining, trading, holding - while launching a digital rupee controlled by the RBI. But hereās the catch: that bill never became law. It disappeared from Parliament. No vote. No debate. No final version. And thatās still the situation in 2026. Thereās no law banning crypto. Thereās no law protecting it. It exists in a legal gray zone - legal to hold and trade, but not recognized as money. The RBI still issues warnings. It still calls crypto a āhigh-risk asset.ā But it canāt stop people from using it. The Supreme Courtās decision is still binding. Banks canāt legally refuse to serve crypto businesses. Exchanges still operate. People still buy Bitcoin, Ethereum, and Solana every day.What Crypto Can and Canāt Do in India Today
Letās be clear: crypto isnāt legal tender in India. You canāt pay your electricity bill in Bitcoin. You canāt buy a car with Dogecoin. The rupee is still the only official currency. But you can legally:- Buy and sell crypto on Indian exchanges
- Hold crypto in your wallet
- Transfer crypto between wallets
- Use crypto as an investment asset
- Receive crypto as payment (though itās not legally binding)
Whatās Next for Crypto in India?
The absence of clear regulation is both a blessing and a risk. On one hand, innovation keeps moving. New DeFi platforms, NFT marketplaces, and blockchain-based lending apps are popping up. On the other hand, investors have no legal recourse if an exchange gets hacked or shuts down. Thereās no deposit insurance. No consumer protection. Some experts believe the next big move will be a regulatory sandbox - a controlled environment where crypto firms can test products under RBI supervision. Others think the government will finally pass a law that allows crypto as an asset class, with strict reporting and licensing rules - similar to how the U.S. treats it. One thingās certain: the days of the banking ban are over. The Supreme Court made that final. The RBI canāt undo it. What happens next depends on whether India chooses to regulate crypto responsibly - or keep treating it like a threat instead of a financial tool.How This Changed the Global View of Crypto Regulation
Indiaās story became a case study worldwide. Other countries that considered crypto bans - Thailand, Indonesia, Nigeria - looked at what happened here and hesitated. Why? Because the Indian Supreme Court showed that blanket bans donāt work. They hurt innocent businesses. They donāt stop crypto adoption. They just push it underground. The ruling set a global precedent: if you want to regulate crypto, you need evidence. You need proportionality. You need to show that less extreme measures wonāt work. Thatās now the standard. And India, despite its contradictions, helped define it.Is cryptocurrency legal in India in 2026?
Yes, cryptocurrency is legal in India in 2026. The Supreme Courtās 2020 ruling overturned the RBIās 2018 banking ban, restoring access to banking services for crypto businesses. While crypto isnāt legal tender and canāt be used to pay for goods or services officially, Indians can legally buy, sell, hold, and trade digital assets without fear of criminal penalties.
Can I still use my bank account for crypto trading?
Yes. After the Supreme Courtās 2020 decision, banks are legally required to provide services to crypto exchanges and individual traders. Major banks like HDFC, ICICI, and Axis now allow deposits and withdrawals for crypto platforms. If your bank refuses, you can file a complaint with the RBIās Banking Ombudsman - theyāve upheld this right repeatedly since 2020.
Why did the RBI ban crypto in the first place?
The RBI claimed cryptocurrencies posed risks to financial stability, could enable money laundering, and threatened the rupeeās dominance. They argued that the volatility and lack of government control made crypto dangerous. But they never provided data showing actual harm to banks or customers - which is why the Supreme Court ruled the ban was disproportionate and unconstitutional.
Is there a new crypto law coming in 2026?
No confirmed law is scheduled for 2026. The governmentās 2021 draft bill to ban private crypto and launch a digital rupee was never passed. As of now, the legal status of crypto remains based on the 2020 Supreme Court ruling. Any new legislation would need to pass Parliament - and thereās no public indication thatās happening soon.
Do I have to pay taxes on crypto in India?
Yes. Since April 2022, the Indian government taxes crypto gains at 30%, with no deductions allowed for losses. A 1% TDS (tax deducted at source) applies to every crypto trade, regardless of profit. This makes crypto one of the most heavily taxed asset classes in India - but it also confirms the government accepts crypto as a taxable asset, not a criminal activity.
